Project #26915 - case study

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Case 3

Assume you have been given the directive to analyze PDLI BioPharma Inc (PDLI symbol on NASDAQ) selected for possible acquisition or taking a minority position. Prepare the report for the Board of Directors and upper management. I don't provide an example because coming up with an effective format is part of the challenge of the assignment. You need to develop a spreadsheet template for your report. You might decide to have separate worksheets for ratios, common size, etc. Or, you might decide to put everything on one worksheet. If you prefer to use Word as the primary document, be sure to double space the report and identify the Excel document as an appendix. Also, refer to the Excel document in the body of the paper when you discuss data from a spreadsheet, e.g., see Appendix A. In other words do not submit multiple documents without organization. One written document with any appendices that you may want to include is the way to go.

Grade

Report

A

1.Spread 3 years of financials for the company using Excel. (Do actual fiscal year-ends, not estimated.). In all calculations, use real numbers from the financials, not reported ratios provided by online and other sources.

3.Calculate financial ratios for three years.Compare them to the industry average for the current period.What can you conclude from the ratios? Any warning signs? Anything that stands out in the firm or industry?

B

4. Perform common size analysis and percent change analysis. What does this analysis tell you about your company? Are there any trends apparent?

6.Calculate the cost of each capital component, after-tax cost of debt, cost of preferred (if any), and cost of equity with the DCF method and CAPM method.

7. Estimate the company’s WACC?

C 8

8.What is your summary of this company’s financial condition?

9.What major factors should the company be aware of as it evaluates possible investment projects in the future?

10.Would you be interested in investing in this company? Why or why not?Are there additional factors that aren’t a part of this case that you would investigate before making a decision and, if so, what factors?

11.Prepare the report for the Board of Directors and upper management.This report should be 8-10 pages of text, well written, double-spaced, plus a bibliography.Include the balance sheet and income statement as attachments and as many other exhibits/attachments as you wish.